Ladies and gentlemen, thank you for standing by, and welcome to Intuitive Q2, 2020 Earnings Release. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session, instructions will be given at that time. [Operator Instructions] As a reminder, this conference is being recorded.

Now I'd like to turn the call over to Senior Director of Finance, Investor Relations for Intuitive Surgical, Calvin Darling. Please go ahead..

Thank you. Good afternoon, and welcome to Intuitive’s second quarter earnings conference call. With me today, we have Gary Guthart, our CEO; Marshall Mohr, our Chief Financial Officer; and Philip Kim, whom I'm pleased to introduce our Head of Investor Relations.

As for me, while passing the lead over to Phil, I plan to continue on in a support role with our Investor Relations team. Before we begin, I would like to inform you that comments mentioned on today’s call may be deemed to contain forward-looking statements.

Actual results may differ materially from those expressed or implied as a result of certain risks and uncertainties. These risks and uncertainties are described in detail in our Securities and Exchange Commission filings, including our most recent Form 10-K filed on February 7, 2020, and Form 10-Q, filed on April 17, 2020.

Our SEC filings can be found through our website or at the SEC’s website. Investors are cautioned not to place undue reliance on such forward-looking statements. Please note that this conference call will be available for audio replay on our website at intuitive.com on the Latest Events section under our Investor Relations page.

Today’s press release and supplementary financial data tables have been posted to our website. In addition, this quarter, we have also posted charts illustrating 2020 weekly da Vinci procedure trends, which is intended to provide additional perspective and detail regarding the impact of COVID-19 on our business.

Today’s format will consist of providing you with highlights of our second quarter results as described in our press release announced earlier today, followed by a question-and-answer session.

Gary will present the quarter’s business and operational highlights, Marshall will provide a review of our financial results, then Philip will discuss procedure details. And finally, we will host a question-and-answer session. With that, I will turn it over to Gary..

first, continued strong performance on customer employee and community safety, while ensuring supply chain stability. Second, continued support of our customers adapted to their specific conditions, different customers are at different stages in this period, and we'll support them according to their needs.

Third, advancing our priority programs, instruments, accessories, endoscopy systems and intelligence programs. And finally disciplined spend management during a period of change. I'll now turn the call over to Marshall, who’ll take you through financial matters in greater detail..

we will work to ensure our employees safety and well-being, including investing in PP&E and employee program. We will continue to support our customers. We will continue to invest in innovation focused on the quadruple aim. We will invest in manufacturing in our supply chain to ensure supply for our customers.

We will ensure that we are prepared for periods when the spread of COVID-19 is contained. Certain costs will be lower as the underlying activities are restricted by COVID-19, including travel and related expenses, clinical trials, surgeon training and marketing events.

We will eliminate spending that is ineffective due to COVID-19, like surgeon and hospital events. We will reduce the hiring of volume-related roles like sales reps and manufacturing employees as appropriate.

We continue to believe that we have a unique opportunity to expand the benefits of computer-aided surgery and acute interventions around the world, and we’ll continue to invest in the business for the long-term.

Our pro forma effective tax rate for the second quarter was 36.9% compared with our expectations of 20% to 21%, reflecting a $37 million or $0.31 per diluted share charge associated with the conclusion of a tax case between an independent third-party and the IRS, related to charging foreign subsidiaries for share based compensation.

Our actual tax rate will fluctuate with changes in geographic mix of income, changes in taxation made by local authorities and with the impact of one-time items.

Our second quarter 2020 pro forma net income was $132 million or a $1.11 per share, compared with $388 million or $3.25 per share for the second quarter of 2019, and $323 million or $2.69 per share last quarter. I’ll now summarize our GAAP results.

GAAP net income was $68 million or $0.57 per share for the second quarter of 2020, compared with GAAP net income of $318 million or $2.67 per share for the second quarter of 2019, and GAAP net income of $314 million or $2. 62 per share for the last quarter.

The adjustments between pro forma and GAAP net income are outlined and quantified on our website and include excess tax benefits associated with employee stock awards, employee stock-based compensation and IP charges, amortization of intangibles and acquisition related items, and legal settlements.

We ended the quarter with cash and investments of $6.1 billion compared with $5.9 billion at March 31, 2020. Cash generated from operations was partially offset by investment in working capital and our infrastructure. We did not repurchase any shares in the quarter. Our current thoughts on capital deployment are in the following order.

We recognize the hardship that COVID places on our customers and we will work with customers, to ease the burden of lower da Vinci utilization, including providing customers with more flexible financing. We will ensure secure supply chain and build appropriate levels of inventory to ensure customer supply, particularly as procedures resume.

We will invest in securing our customers. We will continue our open market repurchase program consistent with our prior practice. And with that, I'd like to turn it over to Philip, who will go over our procedure performance..

Thank you, Marshall. Our overall second quarter procedure decrease was approximately 19%, compared to growth of 17% during the second quarter of 2019, and 10% last quarter. Our Q2 procedure decrease was driven by a 24% decrease in U.S. procedures and a 7% decrease in OUS markets.

On a worldwide basis, procedures in the quarter troughed in April and continued to recover throughout the quarter. Although, worldwide procedure run rates trended closer to pre-COVID levels in June, we caution investors from assuming this trend continues, given the dynamics discussed earlier in the call.

In the U.S., procedure run rates also trending closer to pre-COVID levels in June. However, future of procedure performance may fluctuate as customers and states like Texas, Florida and California encounter increased COVID cases.

From a procedure standpoint during the end of Q2, we saw a broad recovery in most procedures, including procedures that had the biggest decline at the end of Q1, such as bariatrics, hernia and benign gynecology. Within the U.S., there were geographic differences between states that were hit harder by COVID and those that were not.

For example, during the quarter Florida recovered to pre-COVID levels on a run-rate basis, while New York did not. State specific containment strategies impacted procedure growth, and the timing of COVID outbreaks will play a role in driving geographic differences. Outside of the U.S., procedure growth in Asia was strong.

As shown in the chart on our Investor Relations website, China performance was strong, but we would caution investors not to use China as a proxy for our global recovery. Japan growth remained strong at over 30% in Q2, and South Korea also grew in the quarter.

Western Europe saw broad declines with the exception of Germany, which continued to grow in Q2, albeit at a slower rate. We provide these data points to inform investors of the procedure dynamics in the second quarter.

Given the uncertain scope and duration of the COVID pandemic and uncertain timing of global recovery and economic normalization, we continue to believe that Q2 procedure results aren't indicative of forward trends. That concludes our prepared remarks. We will now open the call to your questions..

[Operator Instructions] And first question will come from the line of David Lewis with Morgan Stanley. Please go ahead..

Good afternoon.

Can you hear me okay?.

We can, David. Yes..

Great. Thanks. A little choppy there. So a couple of questions for me, Gary, for you. Obviously, the focus of the call is going to be on the extended instruments program. So maybe one for you, Gary, which is look, in most technology industries where you democratize technology sort of lower price to drive the TAM.

I'm sure you've extensively studied your customer elasticity. And so Marshall talked about a 7% drop in I&A revenue.

Can you just give us a sense of a framework around how to think about improvement in utilization based on these cost improvements? And then also for you, given your competitors who've seen J&J Medtronic time line slip, I think some investors are going to say, why take this kind of move now when the competitive landscape is getting easier.

And then I had a quick follow-up for Marshall..

Yes. Thank you. I appreciate the question. On the first question of do we think that it changes the volume of procedures that might be accessed by our technology? The answer to that is yes. I think the real question will be timeline.

A little bit hard to predict the timeline in the near-term just because I think a lot of it will have to do with COVID and recovery. So that will kind of blur the speed with which it happens.

But if you look out over a couple of years, we clearly think that customers want to use our products, they want to use them broadly and different procedure domains, like general surgery but also broadly regionally.

And to the extent that we can help them with economics, we think they have a preference to use our products, and we think that will help, that’s why we did it. On question two on timeline, we have been working at it for some time. These changes and manufacturing process improvements have taken years to get right.

I think being a little too fancy in the timeline doesn't help the company or our customers, we think that it will be appreciated that we have done it, it will be appreciated that we have done it now. And overtime, I think we’ll look back on it and be happy what we thought it as expeditiously as we could..

Okay, very helpful. And then Marshall for you, I appreciate the commentary on 2019 on revenue, and I apologize if I missed it. The 7% or $170 million -ish type of revenue impact.

Can you give us a sense of what the gross margin impact, gross or EBIT impact maybe gross would be more helpful on 2019? Just trying to get a sense of the gross margin mix shift into '21 on this I&A study use program change. Thanks so much..

Sure. The margin on the products will be relatively consistent with current margins, so the impact is nominal in terms of 2019. It’s a slight down only because you have less instrument and accessory revenue.

And from a mix perspective, you wind up with more systems revenue, and systems revenue have lower margins, but the individual margins on the instruments are not that different..

Our next question will be from the line of Tycho Peterson with JP Morgan. Please go ahead..

Thanks. Gary I have a question on the capital side. If I go back to last quarter you obviously talked about using the $6 million in balance sheet to place more systems. Operating leases did go down. So can you maybe just talk a little bit about that dynamic, what you’re hearing from customers in particular and U.S.

on operating leases? And to Dave's point before with their competitors delayed a little bit, does that change your appetite at all for pushing operating leases in this current environment?.

Yes. So just sanding back to the capital, it's really variable regionally, so where they are not strongly affected by COVID or they’re recovering strongly then capital rotates forward again you saw that in China. And there we feel good about leasing systems or selling systems.

In China they buy them, they don’t lease them, but in other markets, where they are interested in leasing, we’re happy to do that. In regions that are being disrupted by COVID where the flow of patients is changing because of either delays like surgery, or delays in diagnostic pipelines, there they have capacity on the existing installed base.

They may want to move those systems, they may want to upgrade them, but in general we have seen and we have seen this in years past, act one as an operator of a hospital was to use your existing capacity before expanding it. And there, I don’t think leasing is the major issue.

I think the real issue is them getting back to surgery and getting ready to the extent that they have demand, leasing helps us, so I think it's kind of secondary to recovery from COVID in the U.S. primarily..

And then on the procedure recovery, just speaking about looking to the backlog of the patients, is there any some more patients going into laparoscopic or open as there is backlog on robotics or even radiation therapy.

I am just curious about how you think about alternatives to robotics, given backlog today?.

Yes, we get to ask like questions periodically. I don’t see a philosophical shift by heads of perioperative services to try to shift share in response to COVID.

In a really hard hit area, if they are doing everything they can and the only thing they have available is something other than MIS they might go that way, I don’t think that’s their r primary objective of the health system. And pretty quickly they want to return to what they believe is offering the patient the best outcome.

Looking in the evidence, we don’t see any evidence of share shifts at this time. Let’s not say they aren’t there, it's just that nothing has really come up. And what we do see is as much positive for robotics as anything else..

Okay. I'll leave it with that. Thanks..

Our next question will be from Bob Hopkins, with Bank of America. Please go ahead..

Great, thank you.

Can you hear me okay?.

Yes..

Great. Hi, Gary. Thank you for taking the questions. First one for me, I am just trying to understand hospital systems ability to kind of manage through this COVID increase in cases that we're seeing here of late.

So I'm just curious has that increase in the United States in particular been disruptive to surgical volumes or things held steady despite the uptick in cases?.

We've seen -- it really depends regionally. So I guess what we've seen is variance regionally. And hard hit areas we'll see the implementation of deferrals again in other places that had kind of round one and it is starting to creep back in. They're assuming to manage it concurrently a little bit better.

Netting it out the first few weeks in July looks really wavy, hard to call a good trend certainly would not call it a recovery in July in the United States..

Yes, it's okay. I was specifically asking about the U.S. But it sounds like your response was related to the U.S. too..

Yes, certainly true in the U.S..

Okay. And then the second question I had was just on the capital environment. And I know you just made a comment there earlier. But these results -- it's not obvious that there was a big negative impact from COVID on capital. But, you made a comment about a challenging environment going forward.

I'm wondering how much of that is the need to absorb capacity, versus the impact on COVID? I'm just wondering specifically in the U.S., the willingness to kind of purchase capital in this environment? Just would love an update there. Thank you..

Sure. So, we did see -- as we reach the end of the quarter, we did see additional postponements of purchases.

And we did hear from hospitals that they were back to evaluating their budget, thinking about what the ramifications of the costs of COVID treatment were, as well as thinking about the longer-term impacts of COVID in terms of potential recession and impact on their funds. And so I think, the quarter was affected.

The capital quarter was affected by COVID. And going forward, you're right, there will be first, we think the impact of trying to bring back up systems to full utilization. 27% is a pretty steep decline.

And we would expect that they will seek to fill that before they go out and buy more capital, particularly when they're already strained on the financial side. So, I think if we started to see it this quarter, and I think we're going to continue to see pressures on capital spend..

Great. Thank you very much..

Our next question will be from line of Larry Biegelsen with Wells Fargo. Please go ahead..

Good afternoon. Thanks for taking the questions. One on capital, one on the regulatory environment. Gary, obviously system shift greatly exceeded street expectations this quarter. Can you talk about any new programs? You've introduced to support new placement? And we heard you talk this quarter about the loaner program.

Are there any commitments associated with that? And are usage-based agreements increasing? As I said, I had one follow-up on the regulatory environment..

Sure. On that system shifts in the quarter, I'll start to answer and I'll ask Marshall to jump in and provide a little additional color. I think a lot of what we saw in Q2, in the U.S. was around momentum. Capital pipelines are multi-month engagements for our sales teams and for our customers. They have long-term commitments.

They're fairly far down the pipeline. And in some cases, I think they know they want to do this long-term. They went ahead and closed. Outside to us, we had strength because you're starting to see procedure recoveries. And they're looking to build capacity for additional procedures.

With regard to whether a particular sales program or the introduction of a loaner program and so on that really drove that number. I would not guide you that way. I don't really think that's true. But Marshall wanted to step in..

I think you characterized it right. I don't think there was any particular program that drove it. And I think that it really does reflect momentum. Gary alluded to a couple of larger IDN deals getting done. Those were months, if not a year in the making and so it takes time to get them closed out.

And when you're getting close, even though there's COVID virus, they went ahead. And we do see strength outside the U.S., particularly in Asia where our COVID has started to recover..

Thanks, Marshall. And just for my follow-up, Gary. You talked about changes to the regulatory environment. Obviously, we all heard J&J saying that they're not going to be filing 510(k) for their robot in the U.S.

I mean, what are you seeing Gary? At the FDA, do you think future surgical robots will de Novo 510(k)s PMAs, I obviously don’t expect you to speak for J&J but what can you talk about generally on surgical robots?.

Over the last few years we’ve seen an increase in clinical data requirements and evidenced generation per new platform, as we come out and we’ve been talking to you about that over last several years.

With regard to introducing new platforms us or anybody else, I think the pathway depends on the details of the claims, what’s being claimed, what procedures are being done, and the details of the predicates being used. And that would guide any of the conversations we would have with FDA, or frankly, our competitors would have.

So I really can’t call out what direction it will go for everybody. We do see the discussions being pretty rational, and they just have required additional data sets as time goes on, and nothing we’ve heard from the last couple of weeks of earnings calls as kind of changed our perspective on what we've seen..

Thanks so much..

Our next question will go to Larry Keusch with Raymond James. Please go ahead..

Thanks, good afternoon.

Gary, I'm just curious about how you’re able to manage your internal R&D development projects throughout COVID? And I guess really the question is, are you able to keep things going or did you see setbacks as well? I mean I know you talked about the PRECISE trial again, but I'm really thinking sort of your internal development projects..

I think we’ve seen both heroic effort on the part of our teams. We are blessed by having a medical office inside the company and surgeons and medical people who work for the company directly.

So we implemented protocols that allowed us to stay at leading edge of where safety protocols ought to be for infectious disease, and do our best to be able to keep making work, making progress. Our engineering teams have been really creative and thoughtful about getting work done. So we have seen some delays for sure.

I wish I would say otherwise, but it’s just reality. That said, I think that the teams have thought pretty hard to keep our programs progressing and to not just accept slips because COVID exists.

Where we are -- where those things are a little bit out of our control tend to be on things that are in clinical trials, as we mentioned, there you’re going back and forth between hospital, institution on the frontlines. They are using the point of their resources and ways that are important to them to manage COVID, we fully understand that.

So there sometime it’s really us in the support mode. Where we can control it? We can control our environment, we can relay out our spaces, our labs and so on, and we can make a little more progress. So we see some slips but we also see great effort to manage the slips..

Okay, terrific. And then the other question is, certainly there is a sense out there that COVID will sort of accelerate trend that we’ve already been seeing and a move to some sort of ambulatory surgical setting.

Just curious, in the last quarter’s call you sort of mentioned that Intuitive organization was ready to be helpful in any way and certainly sound like, what was implied if robots need to be moved to either ASCs or other care areas that you’d be prepared to do it.

Did you actually see any of that occur? And do you think that there is going to be an accelerated trend to move things that you can into non-acute care settings?.

I'm going to ask Marshall answer the first part of that question around have we seen acceleration in the data set and then I’ll answer the second part of question around what do we think might happen going forward.

So, Marshall if you would jump in on what we've seen so far?.

In terms of ASCs, again ASC is the number of da Vinci type procedures, procedures that da Vinci addresses in ASCs is actually not all the significant. What you really -- if you are talking about HOPDs or ASCs that are owned by hospital IDNs, then we have a large presence and we are addressing procedures that are presented there.

We haven't seen -- I haven't, I'm not aware of movements of large patient quantities to ASCs during this period. I think hospitals are struggling to meet all needs in terms of COVID. So, I don't think I have anything else to add there..

Yes, I'll jump in on my side. I think that surgery in those environments, what actually happens in the operating room is well understood. And robotics and all robotics can play a real role there.

What really determines whether something's in an ambulatory setting, hospital-owned, outpatient department setting or inside a hospital and booked as the same day surgery the differences there are largely driven by reimbursement and reimbursement policy.

To the extent that reimbursement policy stays as it is, then I don't think you'll see a huge move of the kind of procedures that Intuitive does into the ASCs. But if reimbursement policy were to change in the future, then we will change with it and go there.

So there's a lot of same day surgery or outpatient surgery that's done on da Vinci devices, where they live has a lot to do with reimbursement.

So for us, it's -- where does it make sense to be performed logistically, where does it make sense to be performed from a reimbursement perspective and then they have the right tools, technologies and training. And I think we can adjust to that over time..

Okay, great. Thank you..

Next, we'll go to the line of Amit Hazan with Goldman Sachs. Please go ahead..

Thanks. Hey, good afternoon. Just a couple quick ones. On the da Vinci SP, if I heard your comments right about Korea utilization being higher than XI. That was a little bit surprising. So I'm just curious if you can give some color behind that.

And whether that suggests for you that the types of procedures being done on SP are kind of more on the lower acuity side of the spectrum? And whether that kind of pays for you how you might be marketing the product here as it evolves..

Yes. In Korea, the nice thing is that the regulatory clearance allows broad clinical application. As a result, they can do procedures in urology and thoracic and gynecology and head and neck. And they're also looking at procedures in the breast. There I think it's less about low acuity.

And I think they're really exploring, where does the single incision or natural orifice approach really drive clinical value up. The surgeons are I think, thoughtful and innovative here. And that's exciting to us.

In the U.S., we need to run trials and get additional data as we've said before for colorectal applications and for some of the other things that we have in the pipeline. So that will take us some time.

So we look to Korea to say, okay, what does demand look like when not constrained by the regulatory setting? The nice utilization or high throughput sort of tells us two things. One is, there's a real interest in exploring the hypothesis that this creates better outcomes. We can also look at the data there and start to see where it does indeed.

That's exciting. The second thing is it puts the product through the tests of high throughput high turnaround is a well-designed in that setting. And can they use it as much? And that's been powerful for learning but also encouraging for us as to the maturity of the product even at this early stage.

So that's how we're looking at Korea and it will help inform our regulatory strategy in other parts of the world..

And then my follow-up would be on just new doctor training. That was obviously still quite strong for you pre-COVID here in the U.S. and obviously been a key element for you procedure growth looking forward.

So just qualitatively, are you able to just give us a sense of the impact on training that you saw in the quarter? And how you're thinking about the rest of the year? Just levels of normal, even like you did for procedure would be super helpful to just get a sense of where you are with being able to train new doctors?.

Yes, I'll start and Marshall will help you. I'll ask you to jump in and add some color. It's clearly challenged, and one of the things that we're working on. First, right up front is particularly in the United States, doctors are focused on other things and travel which some training requires is strained. So for us, two things have been going on.

One of them is to see if we can forward deploy our training assets to make travel easier or extremely convenient, travel by car for example rather than by plane or use of digital tools and cloud technologies to be able to get access to some of the materials that they might use.

We're actually encouraged on that front, I think we have some investments we have made over the years that we can leverage to help and we’re seeing the beginnings of that. So I think that side looks good. That said, training requires demand generation, requires interactions with our sales teams in addition to training once they get going.

So its substantially below prior levels, we’re starting to see the beginnings of it coming back, but I’ll let Marshal give you a little bit of color there..

Yes, it has been below our historical levels. And the importance of it varies depending on the geography as well.

So we’re in -- let's say in Japan where you have newer procedures that you’re trying to adopt, training becomes a more important element and let’s say in the United States where people can otherwise be trained in their institutions or that we’re talking about mature procedures where proctoring and so forth is more readily available.

So, I think in the United States the contribution of new surgeons is much lower than let’s say in geography like Japan. And so we did see quite a drop-off in training earlier in the United States, because of reluctance to travel and other COVID-related reasons.

And as Gary said, we’re finding other ways to perform in that training, and it could have some impact on us, but again, it's not as big a contributor in the United States as our existing surgeons..

Thank you..

Next we will go to the line of Rick Wise with Stifel. Please go ahead..

Good afternoon, Gary and Marshall. I was reflecting again about the delayed J&J program and about, I think you said it or Marshall said it Intuitive's unique opportunity to invest. Help us think about this.

I have to imagine that in some way perhaps many ways Intuitive has been actively aggressively thinking about the challenge preparing for near-term and long-term for the possibility of more competition. That challenge would seem to be meaningfully delayed for the moment.

Does this offer you in anyway any opportunity to accelerate the pipeline or accelerate spending in some kind of way? Does this window present an opportunity? It does present you some kind of unique opportunity to investment? You're going to do something different now than you would have if it has been more imminent?.

Thanks, Rick. For us we have really focused on being tightly focused on really making measurable improvements to the quad aim, really looking forward looking through windshield rather than in the side mirrors as to what, we think is important.

I guess what I’d say is the greatest limitation for us so far has not been opportunity, I think to do interesting things. There's an enormous amount of opportunity out there to make improvements and there's an enormous technology opportunity.

I think the biggest challenge in the great limiting step for us has really been to continue to deploy our programs with excellence. And so that’s been rate limiting step on growth. I think that other companies out there are investing in things that make sense that are interesting.

I think the vision about where the world might be in 10 or 15 years is not a complicated one, I think it’s reasonably shared. And I think what will differentiate Intuitive and other companies is really the ability to deliver these complex technologies at a very high quality level, and then ways that customers can really use to access their resources.

So, I look around at what’s going on outside, and I think they are engaging some of the both opportunities that are out there in the world and some of the challenges of doing this well and delivering it. So for us, I guess I didn’t wake up this week and think that the world has changed because of somebody else's conference call..

And just the second question for me. On Monday, we presented 100 plus robotic surgeon survey. And of those who said they had wanted to buy eventually, 40% said that they were -- they had made a decision to now postpone. Not a big shock. And you're corroborating that, of course.

But how are you thinking? How would you have us think about that postponed volume? Are you concerned at all that these orders are lost? And could we see a sharp resurgence in capital as normal demand continues, you opened those accounts, new procedures? And on top of that we see these postpone volume, is that the right way to think about it? Thanks, Gary..

Okay. I think there's two drivers of additional capital. One of them is the need for additional capacity driven by surgeon and patient demand for da Vinci procedures. To the extent that that demand is suppressed because of COVID, fears about COVID or delays in diagnostic pipelines that will pressure the capital pipeline. That varies regionally.

So where COVID is well-managed, we see knock on the usual types of sales activities, where COVID is very intense, not surprisingly, they were focused on other things. The second thing that can drive capital demand is new features, product that they want access to because they have older technology.

And in that case, if they have the attention span to pursue it and the capital or leasing dollars to do something about it, then we can continue to make progress. The prior one, the issue of absorbing existing demand in the field -- procedure demand in the field will be the dominant one in my opinion in the next few months.

How long that lasts has a lot to do with COVID and really none of us know how long that will be. So we'll be ready, we'll react. We are in a strong position from an organization point of view. I think we are able to run the business for the long-term. And so we'll do our best in that period. And we'll see it as it as it plays out..

I appreciate it. Thank you..

Well, that was our last question. Thank you. In closing, we continue to believe there's a substantial and durable opportunity to fundamentally improve surgery and acute interventions.

Our teams continue to work closely with hospitals, physicians and care teams, in pursuit of what our customers have termed the quadruple aim:better, more predictable patient outcomes, better experiences for patients, better experiences for their care teams, and ultimately a lower total cost to treat of care.

We believe value creation, surgery and acute care is foundationally human. It flows from respect for and understanding of patients and care teams, their needs and their environment. Thank you for your support on this extraordinary journey. We look forward to talking with you again in three months..

Ladies, gentlemen, that will conclude our conference for today. Thank you for your participation and for using AT&T teleconference. You may now disconnect..